Imagine an organisation with 1,000 people, consisting of 50 leaders and 950 employees. They are spread across 30 departments and six hierarchical levels, ranging from directors, senior managers, managers, supervisors, coordinators, to team members. On top of that, each department has its own specific objectives. Sales always wants to satisfy customers. Production wants products that are easy to manufacture. Finance prefers customers who pay in cash or settle their payments quickly. Accounting prefers products that generate high profits and are not complicated to manage. Human Resources wants employees to remain engaged, motivated, and committed to the organisation. How can these different departmental objectives be aligned? You may also wonder how everyone can move in the same direction in carrying out the organisation's mission and behave consistently with its organisational values. In organisational management, there is one important concept that addresses this challenge: organisational linkage.
Leaders need to design organisational linkage so that people across different departments and hierarchical levels can interact intensively and move in the same direction. Interaction is essential for building a shared mindset and improving decision-making. Intensive interaction becomes even more important when organisations operate in a disruptive business environment. Effective interaction improves organisational effectiveness. This is what we call the organisational process. An organisation becomes dynamic through interactions among people within departments, across departments, and across hierarchical levels.
There are two types of linkage: vertical linkage and horizontal linkage.
Vertical linkage is designed to ensure that the chain of command from top leaders is aligned with employees at the lowest level of the organisation. Horizontal linkage is designed to ensure that people from different departments can interact and work together to carry out the organisation's mission. Both types of linkage require mechanisms known as linkage devices. Let us explore them further.
Vertical Linkage
Organisations need to design vertical linkage devices consisting of referral hierarchy, rules, strategic planning systems, and formal reporting systems. Interaction across hierarchical levels, between leaders and the people they lead, or between top, middle, and lower management, is essential for establishing a clear chain of command within the organisation. If you want to test whether the chain of command is functioning properly, consider a simple example. Suppose top management instructs everyone to wear a white uniform with the company logo during the first week of every month. However, some employees wear white uniforms without the logo, others wear coloured uniforms with the company logo, while some wear the correct white uniform with the logo but only during the second week. This is an example of a weak chain of command.
Referral Hierarchy
A referral hierarchy is a linkage device that establishes who is responsible, what they are responsible for, when they must be accountable, and to whom they must report. A referral hierarchy also prevents people from avoiding responsibility when problems arise within the organisation. It strengthens accountability and allows information to flow more quickly and accurately from the top to the lower levels of the organisation. You need to clearly define the responsibilities of every person within the organisation's chain of command.
Rules
Rules, or various organisational policies, help clarify the chain of command from top to bottom. Everyone should understand what they are allowed to do and what they are not allowed to do, from top management to lower management. Rules should not be strict for lower-level employees but lenient for those at the top. If this happens, the rules will fail to bind everyone consistently across different levels of management. Clear and firm rules make it easier for you, as the captain of the organisation, to steer the organisation effectively.
Strategic Planning System
A strategic planning system is a system that translates the organisation's mission into strategic objectives, supported by various strategic initiatives in the form of programmes and budgets within a formal plan that must be followed by people across different levels of management. As the captain of the organisation, you can direct everyone's energy towards building organisational competitiveness, from top management to lower management. This becomes even more effective when strategic objectives are translated into KPIs for individuals throughout the organisation. A strategic planning system helps align the actions of people from top management down to lower management. As a result, intensive interaction across management levels will naturally take place within the organisation.
Formal Reporting System
A formal reporting system is a linkage device designed to provide feedback and ensure that people across different levels of management are carrying out what has been established in the strategic plan, following organisational rules, and fulfilling their assigned responsibilities effectively. The timing of formal reporting should be clearly determined—for example, on the 10th day of every month. Formal reporting systems are usually followed by meetings to evaluate the reports, improve previously agreed plans, and determine the next strategic actions. A vertical information system should therefore be designed to support the implementation of strategic planning, reporting, and organisational rules.
Horizontal Linkage
After designing vertical linkage, organisations can continue by developing horizontal linkage devices, including horizontal information systems, direct meetings, task forces, and full-time integrators. Horizontal linkage is essential for creating value for customers. Leaders must ensure that people from different departments interact with one another. There should be no silos between departments. There should be no separate kingdoms within each department. There should be only one kingdom and one king within the organisation. Every department must communicate and work together to satisfy customers and remain one step ahead of competitors.
Horizontal Information System
Organisations need to design information systems that can be accessed by people throughout the organisation. Of course, access rights must be carefully determined to protect confidential and sensitive information. However, information sharing is essential for accelerating sales, product delivery, cash flow, and purchasing activities. When an information system connects different departments, communication and interaction become much easier. Organisational agility in responding to change can also improve because everyone receives the same information at the same time.
Direct Meetings
Regular direct meetings between departments are also necessary to coordinate work, solve problems involving multiple departments, and capture opportunities that can only be pursued when several departments participate. Leaders need to determine when cross-department meetings should take place within the organisation. Even better, when departments begin initiating their own meetings without waiting for instructions from top management, you as the organisation's leader should be pleased. It means horizontal interaction is beginning to develop naturally.
Task Forces
Organisations can also establish various teams involving people from different departments. These may include quality teams, morale teams, new product teams, or even teams responsible for organising celebrations and special events. Creating cross-departmental teams helps strengthen interaction and communication throughout the organisation. Silos are likely to disappear when many cross-functional teams are formed. These teams are generally temporary. So, have you already established cross-departmental teams in your organisation?
Full-time integrators
If you want to establish a permanent cross-functional team, known as a full-time integrator, you are designing a matrix organisation. A matrix organisation can be highly effective in strengthening horizontal interaction and communication. However, you need to reduce the potential confusion employees may experience because they have two leaders: one hierarchical leader and another leader who serves as the full-time integrator. You may also need to consider the costs involved in strengthening interaction across departments. The least expensive approach begins with designing an information system, followed by regular meetings, temporary teams, and finally permanent teams.
